Inherited IRA Rules 2026: 10-Year Rule, Annual RMDs, and Tax Strategies

If you inherited a traditional or Roth IRA from a parent, sibling, or anyone other than your spouse, you are now subject to a set of rules that the original owner never faced — and that most beneficiaries don't fully understand. The "stretch IRA" that let beneficiaries take distributions over decades is gone for most people who inherited after December 31, 2019. In its place: a 10-year forced-depletion rule that can compress decades of tax deferral into a single decade. And if the original owner had already started taking required minimum distributions, IRS final regulations (T.D. 10001, effective 2025) now require you to take annual distributions during those 10 years — not just drain the account whenever you feel like it. This guide explains the rules, the exceptions, and how to minimize the tax damage over the 10-year window.

Inherited IRA vs. your own IRA: what changes

An inherited IRA is a legally distinct account type. Once money from someone else's IRA passes to you, it operates under different rules than any IRA you own yourself:

• No contributions permitted. You cannot contribute to an inherited IRA or roll your own funds into it.
• Cannot be consolidated with your own IRA. An inherited IRA cannot be merged into your own traditional or Roth IRA (unless you are a surviving spouse who elects the spousal rollover — see below).
• No 10% early withdrawal penalty. Distributions from an inherited IRA are penalty-free at any age under IRC § 72(t)(2)(A)(ii).¹ A 32-year-old who inherits and takes distributions owes income tax but no 10% penalty.
• Required distributions. Unlike your own IRA, which has no required distributions until your own RMD age, an inherited IRA requires distributions on a schedule determined by who you are and when the original owner died.
• Does not count in the pro-rata pool. An inherited IRA is not "an IRA of which you are the owner" under the pro-rata rule. Holding a large inherited IRA does not contaminate your backdoor Roth conversion strategy — only IRAs held in your own name count in that aggregation.

Inherited IRA vs. inherited 401(k): If you inherited a 401(k) or other employer plan, the first step is a direct trustee-to-trustee transfer to an inherited IRA. Once the money is in the inherited IRA, the same 10-year rules described here apply. See our inherited 401(k) rollover guide for the mechanics of that transfer step.

How to establish an inherited IRA

When you inherit an IRA directly, there is no "rollover" in the traditional sense — the existing IRA account is retitled or a new inherited IRA account is opened and the funds are transferred. Here is the step-by-step process:

1. Contact the IRA custodian promptly. The custodian holding the original IRA (Fidelity, Vanguard, Schwab, or wherever) needs to know of the owner's death. Bring a certified death certificate and proof of your beneficiary status (copy of beneficiary designation form or estate documentation if you inherited through an estate).
2. Open an inherited IRA in your name as beneficiary. If you want to keep the account at the same custodian, they will retitle the existing account as an inherited IRA: "[Deceased's name] IRA, FBO [Your name], Beneficiary." If you want to move to a different custodian, open a new inherited IRA there and arrange a direct custodian-to-custodian transfer — do not take a distribution yourself.
3. Direct transfer only — never take a check. If a check is issued to you personally, the IRS treats it as a taxable distribution. Unlike regular IRA rollovers, there is no 60-day rollover option for inherited IRA beneficiaries after the funds leave the custodian — the distribution is taxable, period. Insist on a direct custodian-to-custodian transfer.
4. Confirm the account type on the new IRA. If you are inheriting a traditional IRA, the inherited account is an inherited traditional IRA. If you are inheriting a Roth IRA, the inherited account must be an inherited Roth IRA. These cannot be commingled — a traditional IRA cannot be converted to Roth in the process of inheriting (though you can do a Roth conversion from the inherited traditional IRA to your own Roth IRA, with tax consequences).
5. Check whether the year-of-death RMD was taken. See the section below on this trap. Before investing the inherited IRA, confirm whether any year-of-death RMD was outstanding.

The SECURE Act 10-year rule

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted December 2019 and effective for deaths on or after January 1, 2020, replaced the stretch IRA with a 10-year forced-depletion rule for most non-spouse beneficiaries.²

The rule in plain terms: The entire inherited IRA balance must reach zero by December 31 of the year that is 10 years after the year of the original owner's death. If your parent died in 2022, the window closes December 31, 2032 — regardless of when you established the inherited IRA or whether you received an IRS waiver notice during the 2021–2024 enforcement pause.

Annual distribution requirement: it depends on when the owner died relative to their Required Beginning Date (RBD). This is the detail that T.D. 10001 (July 2024, effective for RMDs beginning January 1, 2025) resolved after years of confusion:

What "after RBD" means in practice: The Required Beginning Date is April 1 of the year following the year the account owner turns 73 (for those born between 1951 and 1959) or 75 (for those born in 1960 or later), per SECURE 2.0 § 107.³ A parent born in 1950 (turning 73 in 2023) had an RBD of April 1, 2024. If they died in June 2024, they were past their RBD, and annual RMDs apply to you as the beneficiary starting in 2025.

What T.D. 10001 changed for annual RMD amounts: When annual RMDs are required, they are calculated based on the original owner's remaining life expectancy as of the year of death — using the IRS Single Life Expectancy Table, applying the owner's age in the year of death, and reducing the divisor by 1 for each subsequent year. These amounts are minimums; you can always take more in any year. Missing an annual RMD triggers a 25% excise tax under IRC § 4974 (reduced to 10% if corrected within two years).⁴

The IRS waiver years (2021–2024) did not extend the 10-year window. During 2021–2024, the IRS issued notices waiving penalty enforcement on missed annual RMDs for inherited IRAs where the decedent was past RBD. These waivers excused the penalty but did not extend the 10-year clock. If you inherited in 2020, your window still closes December 31, 2030, regardless of whether you took distributions during the waiver period. The IRS has confirmed that beneficiaries affected by the waiver years are not required to "make up" missed RMDs from 2021–2024, but the 10-year clock is unchanged.

Inherited Roth IRA rules

Inherited Roth IRAs follow the same 10-year depletion rule but with two important differences that make them considerably more flexible than inherited traditional IRAs:

Tax treatment of inherited Roth IRA distributions:

• If the original owner met the 5-year holding requirement (the Roth IRA was opened at least 5 years before their death, measured from January 1 of the year of the first Roth IRA contribution): all distributions to you are tax-free, including earnings. This is the most common situation for any Roth IRA that has been open for years.
• If the 5-year requirement was not met: contributions and converted amounts come out tax-free (the owner already paid tax on those), but any earnings that accrued before the 5-year clock completed are taxable to you as ordinary income. After 5 years from when the original Roth IRA was opened, all distributions become tax-free.
• The inherited Roth IRA takes the original owner's 5-year clock. If your parent opened their Roth IRA in 2015 and died in 2026, the 5-year clock completed in 2020 — all distributions to you are tax-free from day one.

Optimal inherited Roth IRA strategy for most beneficiaries: Because distributions are tax-free and there is no annual RMD requirement, the optimal strategy is usually to defer as long as possible — letting the account grow tax-free and taking the full balance in year 10. This maximizes the tax-free compounding period. The exception: if you expect your tax rate to be lower in earlier years (low-income years before Social Security, a job loss, early retirement), pulling some distributions earlier costs nothing and can make sense for cash flow.

Inherited Roth IRA and IRMAA: Because qualified Roth distributions are not included in modified adjusted gross income, taking distributions from an inherited Roth IRA does not push you over IRMAA thresholds for Medicare surcharges. This is a significant advantage over inherited traditional IRAs, where every dollar distributed adds to MAGI.

Eligible Designated Beneficiaries: who still gets the stretch

Five categories of "eligible designated beneficiaries" (EDBs) are exempt from the 10-year rule under SECURE Act § 401(b)(5). EDBs may instead take distributions over their life expectancy using the IRS Single Life Expectancy Table — the pre-SECURE "stretch IRA" treatment:⁵

1. Surviving spouse. A surviving spouse has the most options of any beneficiary — including rolling the inherited IRA into their own IRA (treating it as their own), using the inherited IRA as a distinct account with potentially better early-access rules, or electing SECURE 2.0 § 327 treatment. See our surviving spouse IRA rollover guide for all four paths.
2. Disabled individual. Must meet the IRC § 72(m)(7) definition — generally, unable to engage in any substantial gainful activity due to a medically determinable physical or mental impairment expected to last indefinitely or result in death. Must be disabled at the time of inheritance.
3. Chronically ill individual. Must meet the IRC § 7702B(c)(2) definition — needing substantial assistance with at least two activities of daily living, or substantial supervision due to severe cognitive impairment. Must qualify at the time of inheritance.
4. Individual not more than 10 years younger than the original owner. This covers an adult sibling close in age, a near-peer friend named as beneficiary, or (less commonly) an adult child whose parent had them young. The age gap is measured between the original IRA owner and the beneficiary — not relative to any other date.
5. Minor child of the original IRA owner. Specifically a minor child of the deceased account owner — not a grandchild, not a niece or nephew. The stretch treatment applies only until the child reaches the age of majority (18–21 depending on state law). At that point, the 10-year clock starts and the account must be depleted within 10 years of the child reaching adulthood.

Adult children, grandchildren, siblings more than 10 years younger, non-dependent beneficiaries, and most trusts named as beneficiary are non-EDBs subject to the 10-year rule.

The year-of-death RMD trap

If the original IRA owner had already started required minimum distributions and died partway through the year, the full RMD for that calendar year must still be taken. Under IRC § 408(d)(3)(E), an RMD amount is not eligible for rollover — it must be distributed as income.⁶

This obligation falls to you as the beneficiary if the owner didn't complete it. The year-of-death RMD must be distributed by December 31 of the year of death. If the owner took part of their RMD before dying, you take the remainder. If they took nothing, you take the full year-of-death RMD amount.

How to find out if the year-of-death RMD was completed: Ask the IRA custodian directly. Request the year-of-death RMD amount and written confirmation of how much (if any) was already distributed that year. Custodians are required to provide this. Do not establish the inherited IRA and invest without first resolving this question.

For inherited Roth IRAs: Because Roth IRA owners are not subject to RMDs during their lifetime, there is no year-of-death RMD concern for Roth IRAs — this trap applies only to traditional IRAs.

10-year tax strategies for inherited traditional IRAs

Whether or not you have annual RMD minimums, you have a range of choices in how you distribute the inherited IRA within the 10-year window. The strategies produce meaningfully different tax outcomes depending on your income trajectory:

Strategy 1: Equal annual distributions

Divide the inherited balance by 10 (adjusted for growth) and withdraw roughly equal amounts each year. This smooths income and often keeps you in a lower marginal bracket year-over-year. Good for beneficiaries with stable income who want a predictable tax bill.

Strategy 2: Front-loaded distributions (take more early)

Take larger distributions in years 1–3, then smaller amounts in later years. This makes sense when your current tax rate is lower than expected future rates — for example, if you are currently in a gap year, recently retired, or between jobs. The risk: if income spikes unexpectedly in those early years, front-loading makes the tax worse.

Strategy 3: Deferred to year 10 (back-loaded)

Take the minimum required amounts in years 1–9 and take the bulk (or all) in year 10. This maximizes tax deferral and lets the account compound longer. The downside: year 10 creates a large income spike that could push you into a higher bracket, trigger IRMAA surcharges, or cause Social Security benefits to become more taxable.

IRMAA cliff warning for retirees

For beneficiaries on Medicare (age 65+), inherited traditional IRA distributions increase modified adjusted gross income (MAGI) and can trigger IRMAA Medicare surcharges. In 2026, IRMAA surcharges begin at $109,000 MAGI for single filers and $218,000 for married filing jointly (Part B first tier: +$74.00/month per person).⁷ The jump from the base premium to the first IRMAA tier costs a single retiree $888/year in additional Medicare premiums. A large inherited IRA distribution can trigger this surcharge for two years (IRMAA uses income from two years prior). Model your distributions to stay below the IRMAA thresholds, or accept the surcharge as part of your tax budget for those years.

For inherited Roth IRAs: Qualified Roth IRA distributions do not count in MAGI. This means even a large Roth distribution in year 10 does not trigger IRMAA — a substantial advantage for Medicare-age beneficiaries.

When to work with an advisor

The 10-year window creates real planning opportunities — but also traps. Beneficiaries who coordinate inherited IRA distributions with their own income, Roth conversions, and Medicare planning can materially reduce their tax burden over the decade. The situations where an advisor adds the most value:

• You inherited a large IRA ($300K+) and the 10-year distributions will significantly affect your tax bracket
• You are approaching Medicare age and need to manage IRMAA thresholds during the drawdown period
• The original owner died after their RBD and you need to calculate annual RMD minimums correctly to avoid the 25% excise tax
• You inherited a traditional IRA and are also considering Roth conversions from your own accounts — the two strategies interact
• The estate situation is complex (multiple beneficiaries, a trust named as beneficiary, community property state)

A fee-only advisor charges for advice without earning commissions on products — the right structure when the advice itself is the value.